Panama Canal, consortium make new proposals to rescue expansion

Fri Feb 7, 2014 8:39pm EST
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By Julien Toyer and Lomi Kriel

PANAMA CITY/MADRID (Reuters) - The companies working to widen the Panama Canal and the waterway's administrator on Friday each made new proposals aimed at reviving the multibillion dollar project, after talks broke down this week amid a cost spat and work ground to a halt.

Grupo Unidos Por El Canal (GUPC), led by Spanish builder Sacyr (SCYR.MC: Quote), said it was pushing for a settlement with the Panama Canal Authority (PCA) to resume the work, which would double the capacity of the century-old waterway.

The widened canal would allow bigger ships to ferry cargo such as grains, chemical products and vehicles between the Atlantic and the Pacific oceans.

The consortium said its proposal took into account the concerns of the canal authority "while providing the funding necessary to finish the third set of locks."

It declined to comment on the details of the proposal it sent on Thursday to the PCA.

The Canal Authority said it had sent the consortium a counterproposal based "on the parties contributing financial resources to resume work as soon as possible."

Its proposal does not increase the contract price or accept any of the consortium's claims. It also sets specific dates for the delivery of a new set of lock gates and completion of the works, and would extend a moratorium on repayment of advances "to the extent that the GUPC meets the required delivery schedule".

The consortium's request for an extension to a moratorium on repaying a $784 million advance until the end of arbitration, which is aimed at settling a dispute over $1.6 billion in cost overruns, has been a major sticking point.   Continued...

A man walks between cranes during a tour organized by the Panama Canal authorities of the Panama Canal Expansion project construction site on the Pacific side in Panama City February 5, 2014. REUTERS/Carlos Jasso